It’s that time of year – you may be reflecting on the past year and looking for 2020 resolutions. Why not consider working on your financial fitness? Whether you want to set a savings goal, reduce your debt, or fund home improvement projects – we’ve got your back.
Want to get more financially fit but don’t know where to start? Check out our tips below to find some great starting points for your 2020 goals:
» Create an emergency fund
No one knows what the future holds. We recommend having enough money to cover your expenses for at least three months – but it’d be even better to plan to save have enough to cover six to nine months. This will help keep you protected in the event of a personal financial emergency such as the loss of a job, a debilitating illness, an accident, or a major expense. Your emergency fund will help cover big expenses in a crisis so that you don’t pile up debt with a large credit card balance or by taking out a high-interest loan.
Setting up your emergency fund takes time and patience, but the benefits far outweigh the efforts. If you want to make this your financial fitness goal, start here:
- First, determine your monthly spending – cost of living, transportation, and food will be the heavy hitters to your income.
- Once you have that number, multiply it by three. Reaching that number will be your initial goal.
Even if you don’t think you have the dedication to stick to a savings program, you can start simply. Make meals at home and bring your lunch to work, skip your drive-thru latte, and put extra money as it appears into your fund. View your emergency fund like an insurance policy. Once you have it, safeguard it. If you ever need the money, you’ll be glad you did.
» Ditch your debt
Take a moment to look at your credit report. Don’t know how to access that? We can help. You can access one report free from each bureau annually by visiting annualcreditreport.com. Use this to evaluate your debt. How much credit card debit do you have? Are your interest rates too high? Do you have a student loan? Pick one debt you’d like to see go away and start creating extra room in your budget to pay it off. For some of these debts, you may be better off consolidating into a single, lower-rate loan with one easy payment. Learn more about debt consolidation from the CFPB by clicking here.
» Create a budget
Most of us know we should have a budget, but sometimes it’s easier said than done. Don’t know where to start? Write it all down – every dollar you spend! From the daily coffee, to treats for pets, monthly subscription costs, and gasoline – it all adds up. Writing down your expenses, even those that seem insignificant, is a helpful way to track spending patterns, identify unnecessary expenses, and prioritize the rest.
An easy budget trick: start with the 50/20/30 rule. This simple rule consists of allocating 50% of your income toward essential expenses (housing, transportation, utilities), 20% toward personal financial goals (saving or paying off debt), and 30% toward flexible expenses (eating out, groceries, shopping, hobbies, entertainment, or gas).
» Pass on unnecessary purchases
Define your needs versus your wants and get disciplined. Do you need the latest smart phone, or do you merely want it? Turning down something you want may be difficult now, but it can get you one step closer to your financial goals.
» Save on utilities
Just because you have to spend money on utilities doesn’t mean you can’t cut back on the amount. Investigate ways to save electricity and reduce your heating/cooling costs. Consider cutting the cord with cable – but be careful to watch what you replace it with. A few $10-$16 a month subscription costs can add up quickly.
You can also examine your cell phone plans and look for better deals, either with your current carrier, or with a different one. Carriers often run specials on data plans, which can really add up over time – especially if you are incurring overages on your current plan. Just make sure to check your current plan for cancellation fees. If you’re at home, or have a secure Wi-Fi connection, make sure your cell phone is connected so you’re not using data.
» Automate for your convenience
It might seem scary, but financial automation can ease the burden of completing financial tasks. It can also save you time and increase your efficiency.
- Automatic overdraft protection: In a few easy steps, you can link your savings account to your checking account to have a little added cushion in the event your expenses get a bit tight. Talk to a Member Service Advocate if you have any questions or need some help setting this up.
- Automatic loan payments: Each month, the amount of your loan payment will be automatically deducted from a linked checking or savings account. Saving you time, and ensuring you won’t get a late fee.
- Automate your savings: Direct deposit your paycheck into multiple shares, including one for each of your financial goals. Keeping funds out of sight helps reduce the urge to spend.
- Take advantage of Bill Pay: Setting your bills up with Bill Pay is a great way to save time, money, hassle, and offer peace of mind knowing your bills are paid on time every month. Learn more about Bill Pay at Clackamas by clicking here.
» Watch it grow
As your savings account balance begins to grow, you’ll feel more motivated to take it even further. We can help make your money work smarter, not harder, for you! Stop by a branch and we can tell you how.